EY CEO on the Great Resignation and the importance of 'taking care of your people'

Yahoo Finance's Alexis Christoforous spoke with EY Global Chairman & CEO Carmine Di Sibio on the importance of being 'laser focused' on employees, supply chain disruptions, tax rates, and corporate social responsibility.

Video transcript

ALEXIS CHRISTOFOROUS: Carmine Di Sibio is EY's global chairman and CEO. He leads one of the largest professional services organizations in the world, with over 300,000 people in more than 150 countries. He plays an active role in the World Economic Forum and is committed to environmental, social, and governance issues. Welcome back to Yahoo Finance's All Markets Summit, everyone. I'm Alexis Christoforous and I am excited to welcome Carmine Di Sibio, CEO of EY to the show. Carmine, always good to see you and thanks so much for being with us. I know you're coming to us live from London.

And I want to begin with the great resignation, something we keep talking about here at Yahoo Finance. A record number of Americans quitting their jobs. And I know EY was out with a study recently that found more than half of the workers say they left because they thought their boss was unsympathetic to what they were going through either at work or in their personal lives. Talk to us about the importance of empathetic leadership when it comes to trying to retain your workforce.

CARMINE DI SIBIO: Well, Alexis first of all, thanks for having me here. It's great to be with you from London. We actually have our global leaders here together in London for the first time in two years, so we're all excited to be here. Look, this is a topic right now where I was just talking to our team in terms of the importance of people, the importance of being empathetic, the importance of making sure that we're taking care of our people.

And we talk to our clients about this all the time. We've actually hired 115,000 people in the last year, but we've also lost people. And one of the surveys out there is that over 40% of the people out there are just looking to change jobs coming out of COVID because they want to do something different. So the culture of the organization, Alexis, is incredibly important. And our culture and hopefully many companies' culture is around taking care of their people.

And that was really shown during the pandemic. I think companies that took care of their people, I think they're being rewarded now. And companies that didn't or didn't really care about it or were not empathetic, then I think they're the ones that are losing people today. So it has been and it is a time of what I say is churn. There are a lot of people leaving their jobs, but there obviously are also a lot of people hiring and changing jobs. So we all have to be prepared for this. But it is a time of great transition for many people.

ALEXIS CHRISTOFOROUS: Well, certainly your clients are some of the biggest companies in the world. Coca-Cola, GM, AT&T, Lockheed Martin. What are they telling you when it comes to finding workers, retaining workers? What are some of their challenges right now? And how are you helping them navigate that?

CARMINE DI SIBIO: Well, let's start with being flexible. So this gets into the whole idea of, are you being flexible, are you being fair, are you paying fair wages? But today, everyone wants their employer to be flexible with them. That might mean amount of time at home or in the office or virtual. That might team having flexibility around holidays. Those are all really important to people.

And probably the most important thing is that people are learning. They're learning a skill set. Especially younger people, Alexis. And we're telling our clients you have to be laser focused on your people, laser focused on making sure they're getting trained and they're getting upskilled. That's one of the most important things today, because many of our workers, many people have to be unskilled in terms of what are the jobs of the future. And obviously, a lot of that is around technology, it's around artificial intelligence, it's around different technologies around the world.

And so that is important, and we're telling our clients that that's got to be a major focus. And many of them are going through a transformation. They're going through a transformation in terms of their talent, their focus in terms of what their people should be looking at. So there's a lot to be done and it's a time where we're going to have winners and losers when it comes to talent.

ALEXIS CHRISTOFOROUS: Another big challenge, of course, for companies right now is the supply chain disruption affecting companies across a lot of different industries. Again, what are you hearing from your clients, and how are you able to assist them during this time, Carmine?

CARMINE DI SIBIO: Yeah, so this is obviously a huge topic, and it ties into the labor shortages that our clients are going through. But just before COVID, we did a survey of our clients globally and we found out that only 25% of our clients actually had a digitized supply chain. And so obviously, people learned during COVID that without a digitized supply chain, you really can't operate in a world that we've been operating in because of the pandemic. So the number one thing is, companies have to get their technology up to speed when it comes to their supply chain.

Number two, there's been a lot of geopolitical issues, there's been issues disrupting supply chain, including labor shortage. So this is all, and we've also been helping clients de-risk their supply chain. In particular, in terms of countries that they're in, making sure that they have a backup type supply chain going forward, making sure that they're not susceptible to one country when it comes to their supply chain. So this is critical. We are going through a place right now where I think labor is incredibly important, the people supply chain.

So we have to do everything possible to make sure that companies are allowed to hire, are attracting people, and are able to produce the goods that need to be produced. We are in we are in a state of really disruption, but also a state of crisis when it comes to our supply chains around the world. And I think this is going to be incredibly important as we go into the holiday seasons around the world. And it's something that obviously, the more planning that can be done, the better, and the more planning around people supply chains that have been done are going to be helpful.

ALEXIS CHRISTOFOROUS: I want to switch the focus to what's happening in Washington, DC right now, because a couple of days ago, President Biden admitted he doesn't have the votes he needs to raise the corporate tax rate to pay for his infrastructure spending bill. Lawmakers now looking at a billionaire's tax. And I know when you and I spoke earlier in the year, you said that raising corporate taxes would force companies out of the US. What would your message be to lawmakers right now with regards to raising taxes?

CARMINE DI SIBIO: Yeah, so this is something that obviously is very, very sensitive, and it's very sensitive with our clients. We have to be competitive on the world stage when it comes to tax rates. And there is some room, but right now, the global deal on 15%, a global minimum tax, is a fair deal. But that, all the countries have to sign up to that, and the US has to sign up as well.

There are a lot of details behind it, but I do think for us to be competitive, we have to have competitive tax rates. And if we don't, we are going to see what we saw 10, 15 years ago. Companies will start moving their headquarters to lower tax rate jurisdictions. I mean, that's going to be the fallout. So it has to, it has to happen, Alexis. There are different ways in which the government can generate revenue. But right now, companies are creating many jobs, jobs in the US, jobs everywhere, and we need to be careful on the tax rate.

ALEXIS CHRISTOFOROUS: Now certainly at EU, at EY rather, you audit companies' financials, that's what you do. But I know that that has expanded recently to also include auditing a company's efforts when it comes to environmental, social, and governance issues. And I know you've been calling for a global ESG standard to help you better measure the progress that these companies are making. How are you doing with that progress, Carmine?

CARMINE DI SIBIO: Thanks for asking, Alexis. So I think as I mentioned to you before, we, as well as the other big four, have been involved in creating 2001 core metrics around ESG. We did this with the International Business Council of the World Economic Forum. We have over 100 companies that have signed up to this. We at EY have disclosed these 21 metrics. We call it EY Value Realized. The other big four disclosed them as well. And we're private companies. We don't even have to disclose them, but we wanted to do that to really show the world that we're serious about these metrics.

The metrics really hit all the different pillars of ESG. And it's incredibly important that we all get moving on consistent metrics. This is our way to really create building blocks in terms of metrics. There are 21 metrics. They're relatively simple. They might not be simple to gather the data, but they're simple in terms of the metrics. Because at some point, regulators and standard setters are going to put in regulations and/or standards. So that's one of the projects that we've had going on.

We are very involved around the world with different standard setters. We are trying to push, and when I say we, I mean all the big four, we are trying to push for global standard / if you ask me, I'm not sure that we're getting there. It looks like IFRS is moving a little bit faster. But they're very focused on climate and sustainability.

I was talking to one of the CEOs at a conference I was at recently, and frankly, he said that Europe is really focused on sustainability and climate. The United States is really focused on social issues, including diversity and inclusiveness. And then Asia is more focused on governance because of worker rights and so forth. So we have to try to bring all this together.

And right now, I would say we're heading down the path similar to accounting standards. We'll end up with two different types of standards; one more similar to US GAPP and one more similar to IFRS. Hopefully that won't be the case and we're trying to put up the good fight to get everyone on the same page globally. But right now, it's not moving as fast as we'd like to.

Now our own, the metrics that we did produce, like I said, we have over 100 companies already disclosing. Every client that we talk to, we're talking to them about these metrics. So we feel like we're making progress, but there's a long way to go, Alexis.

ALEXIS CHRISTOFOROUS: I know, Carmine, that you have made a pretty big commitment to improving the quality of your audits, especially after there were a series of setbacks, including EY failing to sound the alarm detecting fraud at the German payment processor, Wirecard. What steps specifically are you taking to improve the quality of your audits? But also to improve the ability to detect fraud?

CARMINE DI SIBIO: Yeah. So Alexis, first of all, on Wirecard, we did sound the alarm. We probably sounded the alarm too late in 2019, and I wish we had sounded it earlier. But we are taking big steps. Number one, we are training all our auditors more than ever in terms of detecting fraud. And we think that's really important going forward.

We've also changed a few of our processes around to what we call Client Acceptance and Client Continuance, which is really, how do we evaluate the clients that we work for? And we're using technology much more, much better right now. We're doing things like social media scraping and so forth to really figure out who we're dealing with on the other side. And that's something that's been helpful as well.

But frankly, what we are doing to strengthen audit overall is really investing in technology. Because tomorrow's audit and even today's audit is going to be much more focused on using artificial intelligence, using blockchain to do a better audit, to do a more wholesome audit that we've invested and we're going to invest actually over $2 billion on audit quality.

A lot of that is around our audit platform. It's a global platform. We call it Canvas. All our audits have been off this platform. And then we have different pieces that attach onto the platform in terms of artificial intelligence, in terms of data and analytics, to make sure that we're utilizing all the cutting edge technologies today. This has all been put in the cloud, so we can make changes to it pretty rapidly. And those investments will help us do a better audit.

In addition to continuing to train our people, that is critical here, we have a big job in the future on training our people not only to audit financials as you said earlier, but also to audit disclosures and disclosures around ESG, in particular, sustainability. We're going to have to really teach all our people to count, dollars, but also count carbon going forward. And it's a great opportunity for us, but it's also a great need for investment going forward.

ALEXIS CHRISTOFOROUS: All right, well, Carmine Di Sibio, CEO of EY, always good to see you. Thanks for spending some time with us today.